Articles

Your Vote & Property Taxes

April 2018

Who is required to pay property taxes?  Does what is passed when we vote affect property taxes?  And how is it decided what amount is owed and when is it due?

Property taxes are only paid by property owners.  To pass a portion of this expense along to tenants is still allowed, however, few pursue this, since it is time consuming and not always approved by the Rent Board.

Our voter “pamphlets” are sent out by the Department of Elections.  The two for the 11/8/16 presidential election were 500+ pages combined.  These voter pamphlets attempt to simplify each proposition or bond, and include a timeline and summary of potential costs, if any, when passed.  To truly understand the measures, however, requires reading not just the minimalized and slanted summaries, but, also, the legal documents at the back of each “pamphlet”.  Add to that the further research oftentimes required, and few take the time or ever fully understand the measures.  The information is dense and beyond most voters’ skill, knowledge and experience levels. Instead, many just contact a friend the night before elections and ask how to vote.

This type of whimsical, feel-good behavior has major consequences on those who own property, depending on what gets passed, and especially when the measures require ongoing cash-flow into the future – and only from property owners.  For people living on tight budgets and limited incomes, they could lose their home.  Personally, I recommend attending a well-researched, non-partisan League of Women’s Voters presentation (https://www.lwvsf.org/) at your neighborhood association.

How did these lengthy “pamphlets” and the topics get so complicated, and why so many requiring our vote?  Per our State Charter, California is a consumer-oriented state and allows us input.  In other States, knowledgeable representatives are voted in by the people who, instead, vote on their behalf.

How does something get on the ballot?  Ballotpedia.org is a helpful website offering guidelines to qualify ballot measures.  Simply put, for the State, the California Attorney General reviews the initiative wording, provides a ballot title, allows 30 days for citizen review and input, determines the number of valid signatures required and the timeline prior to the next election.  For San Francisco, ballot measures can be put before the voters by referral from the City Council or through a signature petition drive.

My understanding and personal concern is that these initiatives are presented to the public for voting, however, are not, as yet, fully vetted.  So, ultimately, once passed, they might still need further rewriting and a future vote.

Here’s how these passed measures relate to property taxes.  We have the locked-in 1% State tax (Proposition 13), collected and disbursed by the County.  Every July, at the start of the new fiscal year, the City’s budget is revisited regarding their “tax rolls”, which are the estimated funds needed for that fiscal year’s streets, schools, lighting, trees, infrastructure, etc.  That rounded-up cost is approximately .25%. The property’s sales price is then multiplied by that totalled 1.25% to establish your beginning property tax rate.  (This is, also, the ballpark calculation lenders use to qualify people.)  Yearly, you then add to that 1.25% the breakdowns of all the measures passed that connect to property taxes, and that’s your adjusted tax bill.  Some passed measures do have sunset clauses, thankfully, but more are continually being added to the property tax burden through voting, and then shouldered by the few versus the many.

Taxes are due in December (first installment) and in April (second installment).  Those bills arrive in November.

A lot of property owners, when voting, tell me they now just say NO to every single measure that could conceivably cost them more property tax levies, regardless of how wonderful the idea, in order to survive and live here.  They no longer can absorb those costs falling solely on them.

Regarding Proposition 13, nearly two-thirds of California’s voters passed this measure on June 6, 1978, reducing property tax rates on homes, businesses and farms by about 57%.  Prior to Proposition 13, the property tax rate throughout California averaged a little less than 3% of market value.  Proposition 13 cut and capped property taxes and mandated a two-thirds vote for any future tax increases.  Howard Jarvis, who appeared on the cover of Time magazine, was responsible for its passage.

Presently, in San Francisco, a property purchased for $800,000 and held for 10 years can go from $10,000 a year in taxes (1.25% times sales price) to possibly an additional $3,000 a year, depending on the type of property owned and ballot measures passed by voters.  If you have lots of disposable income, then you’re fine.  If you don’t, this can be financially damaging.

As we now have fewer and fewer people even willing to read, let alone research and give the time necessary to truly vote knowledgeably (or vote at all, for that matter), maybe it’s time we rethink our State Charter and ballot system, along with the additional costs property owners alone carry.